Lord Of The Flies: Dytopia Is Arriving

Paper money eventually returns to its intrinsic value – zero  – Voltaire

I was driving around Denver yesterday doing my “boots on the ground” due diligence scouting of the local housing market.  I continue to see some “sold” and “under contract” signs but I’m seeing a pile-up forming in new “for sale,” “price reduced,” and “for rent” signs.   The traffic update on the sports radio reported a back-up at an intersection in Denver caused by a fist-fight that had broken out between two drivers.  This country is sliding back into neanderthal times.

The U.S. economic system is slipping into dystopia and the Government/Fed is doing everything it can to try and prevent the process.  The two most obvious signs of this are the perpetual market interventions by the PPT to prevent a stock market dump and the relentless propaganda flowing through the mainstream media which originates from the policy-implementing elitists (business and political).  Both efforts are insidious attempts to force control over our system

Overnight the S&P 500 e-mini futures were halted twice.   The SPX mini is the Fed’s choice intervention tool because it can direct the market with minimal capital requirements.  The e-mini is hyper-sensitive to big orders and tends to lead the big SPX directionally because of this.   The emini trading was halted after a sudden plunge in the futures at 5:51 a.m. EST, after which a massive buy order (the PPT) hit the tape and spiked the eminis straight up. The market was halted again after the spike up stalled and the emini was about to plunge again.   You can see the action here:   E-mini Market Halt

The graphic linked above was provided by Nanex’s Eric Hunsader.  Prior to the market’s first market halt, Hunsader tweeted:  “emini getting tossed around like a rag doll:”

UntitledI found Hunsader’s allusion to “Lord of the Flies” to be quite haunting. For me it encapsulates the societal, political and economic direction in which the United States is headed. Rule of Law has been completely eroded by corrupt Presidents and citizen nonchalance. Many beside me have alluded to the fact that the U.S. political system now resembles that of a Central American Banana Republic. That’s no secret to anyone who cares to peek at reality.

But where this whole process starts to get scary is when that needle heads toward “Lord of the Flies.” That is the point at which we will see and experience the truly dark side of humanity. Too me the outbreak of fistfights at traffic intersections and the herds of panhandlers standing on busy urban and suburban corners reflects the movement of that needle past Banana Republic to the left…

I’m not an e-wave theory advocate but there’s merit to some of the analysis.  Robert McHugh is probably the most skilled practitioner of it these days and he’s run 5 different “wave” scenarios – all of them suggest a high probability of serious market crash coming soon – he specifically references the August sell-off as “gentle” in comparison.

If this stock market does what we all know it will do eventually, which is seek a level that reflects its true underlying intrinsic value, all hell will break loose in this country and we’ll start hearing reports of much worse occurrences than fist-fights at traffic intersections.

What is the “intrinsic value” of the S&P 500?  Based studying the earnings of enough S&P 500 companies using the GAAP accounting standards that were in place 20-30 years ago – vs. non-GAAP, adjusted-GAAP, and new GAAP accounting applications used today – I would suggest that S&P 500 has “fair value” around the 500-600 level.  A large portion of reported net income/EPS is income that is non-cash and is manufactured by new accounting gimmicks.  I detail this extensively in all of my (non-mining) stock reports.

The S&P 500 hit 666.79, which is in my “fair value” range, intra-day on March 6, 2009 (no, I don’t read any significance into “666”).  We saw how the Fed and the Treasury responded: they began dumping trillions of printed dollars into the banking system and drastically altered some of the GAAP accounting rules – i.e. they changed the rules of the game.  This was in response to the S&P 500 seeking fair value.

What is frightening to contemplate, in the context of Eric Hunsader’s haunting Tweet, is what the Government’s response will look like this time around when the PPT loses control – which I believe is occurring now – and the S&P plummets again in an attempt to seek it’s proper level.  Remember:  just like water, the stock market eventually always finds its own level.

23 thoughts on “Lord Of The Flies: Dytopia Is Arriving

  1. The big question is how many people are using debt-free liquidity (like bullion) to grease the economic wheels of the country …. and the world ?

  2. Some argue that the plan is to let the markets crash. The empirical evidence does not support that premise. The financial powers are doing everything in their power to hold up equities.

    1. “The financial powers are doing everything in their power to hold up equities”
      That is true, until they are ready to pull the plug. They want complete and total chaos and I guess we do not have enough of that yet.
      Just look up
      The Fabian Window

      1. They have painted themselves into an apex and must rely on the market to save the market. They cannot provide asset based liquidity from the apex of power ….. not now that we are in real-time trading. Debt markets, including fiat currency would drop like a stone. The shift has to be organic …. tempered….. almost invisible.

        We must be as wise as serpents, yet as gentle as doves

  3. Spot on Dave…
    out here in the Bay Area shit is completely falling apart…
    everyday one has to avoid having to shoot assholes who dont give a fuck about you or anyone else…
    no common courtesy or respect for other people or their property…
    “The Road” is upon us…..
    hope to see u on the other side….
    thanks for all your hard work…dont know how u do it but u r appreciated…

  4. Yeh losing control..but unfortunately at the controls. In a word the strategy is”Japan” they’ve gotten away with it for 20 years’ and only because of supply from the the supposedly healthy western distribution lines (commoditie’s blah blah) but now it is a reserve currency. If the supply side holds’ up i’ll be very surprised. The one thing with all the metal’s manipulation is it is really exposing the damage being done to producer’s , they all think they’re going to be able to inflate debt away. And now the reality of continued falling prices…..well empty supermarket’s as far as we can all see is coming.

  5. It all reminds’ me of that famous Winston quote when Keynes was arguing no need to be chained to a gold standard any more and Winston replied ..”you mean being chained to reality?”

  6. Dave – I know this is a bit off topic but I can’t help but broadcast the misery I / our firm has been experiencing since obamacare hit the books. Seems Otraumacare has hit my firm big time – this (below) from our HR notifying us of our soon to switch to another provider (fourth in 4 years mind you – seems we are chasing cost now). So far since the pin head in the WH signed that stupid wasteful commie law my premiums have tripled and out of pocket has doubled, and with the proposed plan (mind you BCBS required a 15.00 copay a couple years back) copay will be 50 to 70.00 depending if in network or out. We used to not have a med co-pay and that is now 35.00 or 10% of cost depending on med. Blessedly my kids and I are all healthy and doing our best to remain so – the best insurance I am learning is to stay out of the medical oligarchy / system / matrix as best you can. Once in – there seems there is no turning back and no way out.

    Message from my HR herewith:
    “It’s that time of year again – to perform our annual healthcare renewal. Healthcare continues to be one of the fastest rising costs for companies and the upcoming year is no exception with our current insurer United Healthcare (UHC) projecting a double digit increase for the 2015 – 2016 plan year.”

    Dave, like you, I honestly wonder when a full force revolt is gonna hit this country – with silver and gold being manipulated, costs going through the roof (food lately anyone – a dozen f….ing eggs are now 3 clams!!!) and other incidentals that have just made life in this country increasingly coarse over the last decade I have to wonder if the fuse that was lit is nearing the powder keg.

  7. IF what Ted Butler say’s about JPM is true? IF the rumoured association between JPM and Big Brother is true? you sure could pay a lot of soldiers’ with 400 million oz slv. Could be a whole show for SOT there? shooting the breeze on this one, but it is kinda creepy if it’s true.

  8. Dave–Yesterday a friend who knows my feelings about metals told me he had a small amount of money to invest in something that would be best to buy in these times. Specifically, he asked me about silver. His wife is a nurse and is often in not so good places at odd hours. I suggested instead, a stainless steel Pb delivery system made by Taurus in .38 calibre. Hornady makes a Pb bullion nugget in 90 grain. especially for women. Low recoil, separates on impact and is a surgeons’ nightmare. Also, as an aside, the FBI issued a special warning Wednesday night to law enforcement officers to be especially vigilant for the next few days. Specifically, do not sit in your car and do your paperwork.. Watch where you are and watch your back. Apparently, there was a website–now dark–admonishing their members to kill a cop, or failing that– any white person. I hate to think what kind of shape our country would be in if we had not elected the most unifying president ever.

  9. The Role of Central Banks in Global Austerity
    Timothy A. Canova
    Indiana Journal of Global Legal Studies
    Vol. 22, No. 2 (Summer 2015), pp. 665-695
    Published by: Indiana University Press
    Stable URL: http://www.jstor.org/stable/10.2979/indjglolegstu.22.2.665
    Page Count: 31
    http://www.jstor.org/stable/10.2979/indjglolegstu.22.2.665?seq=1#page_scan_tab_contents
    Abstract
    The literature on austerity, by scholars and policymakers alike, has largely downplayed the important role of central banks in designing and implementing global austerity both before and since the 2008 financial crisis. This article considers how and why the world’s leading central banks display an inherent bias toward austerity. As central banks have become increasingly influenced and even captured by large private banks and financial institutions, they have pursued policy agendas that favor those same private interests. The structure of the U.S. Federal Reserve suggests a central bank that has been captured by design and is rife with inherent conflicts of interest in its governance, regulatory, and monetary policy functions. These conflicts are often overlooked because of the myth of central bank independence, which has rested on truncated empirical studies and flawed readings of economic history. Yet, the myth has legitimized the Federal Reserve’s policy agenda—particularly beginning in the 1980s when Alan Greenspan became chair of the Federal Reserve—when deregulation, liberalization, and privatization came to serve the private interests of Wall Street banks while creating a boomand-bust bubble economy. The austerity bias of central banks was also revealed in both the academic work and monetary policy approach of Ben Bernanke, who succeeded Greenspan as Federal Reserve chairman just ahead of the 2008 financial collapse. Not only was the Federal Reserve’s response to crisis a reflection of the domination of Wall Street interests, it also revealed a complete misreading of the lessons from the Great Depression by Bernanke and other mainstream economists. The result has been a flawed “trickle-down” response to the financial crisis, as the Federal Reserve and other leading central banks have provided massive subsidies to financial institutions and markets while relegating other sectors of the economy and society to the pains of austerity. A more balanced economic approach will require reform of central bank governance to include representatives of a wider range of social interests in monetary policymaking.

  10. I have to agree with Gregory Mannarino.
    “Up is down and white is black”
    The only company in the green on Nasdaq today is a comapny that hasn´t shown any profits for 20 years.
    The profitless ponzi scheme is going bananas on the Nasdaq- I wonder how many billions in bribes PPT has received from Bezos.

    1. We watch what awaits Amazon,
      When the world will see the big con.
      Pity the fate of Jeff Bezos,
      And those fat, corporate weazals
      Who will beg to be paid in Yuan?

      http://news.xinhuanet.com/english/2015-09/11/c_134614477.htm
      New measures will make yuan more international: report
      English.news.cn 2015-09-11 13:09:33

      EXCERPTS:

      “BEIJING, Sept. 11 (Xinhua) — China’s latest efforts to open up its foreign exchange (FX) market and facilitate use of the yuan will boost the currency’s international acceptance, according to the latest report from China International Capital Corporation (CICC).
      The moves will enhance the usability of yuan, also known as RMB, both as a reserve currency and as a settlement currency…

      China will open its onshore inter-bank FX market to foreign central banks and set up a cross-border yuan payment system before the end of 2015, Chinese Premier Li Keqiang said at the Summer Davos Forum in the northeastern city of Dalian on Thursday…”

  11. There is virtually no individual 90% silver US coins out there. The cheapest 90% silver dollars are $ 21 clownbux a piece for a coin with a $11.06 melt.

    Some

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